December 9, 2020
BRF shares rise after announcing expansion plans
Major Brazil-based food processor BRF SA saw its shares rise after announcing expansion plans to halal markets in Turkey and Saudi Arabia, as well as an increased focus on the domestic market as the company aims to triple its revenue over the next 10 years, Reuters reported.
BRF said it will spend BRL 55 billion (~US$10.8 billion; BRL 1 = US$0.20) over the next 10 years to boost its business and challenge major competitors like JBS SA. Its shares ended 9% up to BRL 23.13 (~US$4.52) while the Bovespa index increased only 0.18%.
BRF executives said the new plan includes opening production facilities in North America, Europe, or select Asian countries. 50 countries have been reviewed for possible investment, such as the United States, Canada, and Mexico, but the executives did not elaborate further.
BRF management, said it aims to derive 70% of its revenue from value-added products over the next decade, compared to 50% currently.
The company owns the Sadia brand in Brazil and the Banvit brand in Turkey
In the new plan, BRF will shift from selling selling fresh chicken and pork products towards increasing its market share in ready meals, pizzas, and chicken nuggets.
Company executives said the new plan will turn BRF around following a string of quarterly loss and its alleged connection to food safety scandals in 2017 and 2018. The scandals led to a company management shakeup.
BRF said it may raise net revenue to BRL 65 billion (~US$12.6 billion) annually between 2021 to 2023. The company reported net revenue of close to BRL 23 billion (~US$4.4 billion) between January to September this year thanks to strong domestic demand driven by a government cash aid programme to assist Brazilians during the COVID-19 pandemic.